For many nonprofits, fundraising success is often measured by total revenue. If annual fundraising revenue is growing, organizations may feel quite confident that their fundraising strategy is working well. However, the amount of money you raise might not always reveal how that revenue is distributed across your donor base.
In some cases, overall revenue remains stable or even increases while the number of donors contributing gifts is actually declining. At first glance, this may not seem like a problem. Your team is hitting your fundraising targets, so is that really a concern? The answer is often yes.
While major donors play an important role in helping organizations grow and expand their impact, receiving more funding from a smaller number of donors can create risks that may not show up right away. And understanding these risks can help organizations make more informed decisions about their fundraising strategy and long-term sustainability.
When More of Your Funding Comes From Fewer Donors
Most organizations understand the importance of diversifying revenue sources. A nonprofit that relies heavily on a single grant, one corporate sponsor, or one fundraising event may face significant challenges if that source of revenue changes or disappears. And the same principle applies to individual donors.
Two organizations may raise the same amount of money each year, but their fundraising situations can be very different. One organization may receive support from hundreds of donors, while another may receive a substantial portion of its revenue from a relatively small group of donors making significant contributions.
Neither approach is inherently good or bad. In fact, many successful organizations rely heavily on major gifts. The challenge is that as funding becomes concentrated among fewer donors and the impact of losing even one large supporter becomes much greater. A donor deciding to support a different cause, change their philanthropic priorities, or reduce their giving can create a significant revenue gap. The organization may have achieved its fundraising goals this year, but there is still a risk that is being hidden by these larger donations.
Why Major Donors Become Increasingly Important
As organizations gain experience and their fundraising programs grow, they often focus greater attention on donor stewardship, relationship building, and major gift development. Building stronger relationships with committed supporters can be one of the most effective ways to increase fundraising revenue. Major donors often provide funding for new initiatives and significant projects that might not otherwise be possible.
The challenge is that as major donors become more important, the organization's knowledge of those relationships becomes more important as well. Questions that may once have been considered helpful suddenly become essential. For example:
Who are the donors providing the most support to the organization?
Where are conversations and important donor interactions documented?
What initiatives interest each donor most?
Is there a key person who handles each relationship?
What happens if that person leaves?
These questions are not simply fundraising questions. They are also about making sure important relationships and information remain with the organization, even when staff or leadership change.
Understanding Your Fundraising Risks
Organizations often review fundraising revenue, campaign performance, and annual goals. These measures remain important, but they do not always reveal underlying fundraising risks. As more of an organization's funding comes from a smaller group of donors, leadership may benefit from considering some of the following questions:
What percentage of fundraising revenue comes from the top five or ten donors?
How much revenue would be affected if one or two significant donors reduced their support?
Can new staff members quickly understand the history of important donor relationships?
These questions help organizations look beyond annual fundraising totals and focus on long-term sustainability.
Why Donor Information Matters More Than Ever
When a larger share of an organization's funding comes from a smaller number of donors, having accurate and accessible donor information becomes even more important. Every donation, note, interaction, and stewardship activity contributes to a larger picture of a donor's relationship with the organization. Over time, patterns emerge that help organizations understand which supporters are becoming more engaged and where future fundraising opportunities may exist.
Organizations that can easily view donor history, engagement records, and relationship notes are often in a stronger position to continue building those relationships, even when staff roles change. Maintaining this information can help reduce fundraising disruption and ensure that important knowledge stays with the organization.
Looking Beyond This Year's Fundraising Results
Fundraising success is not simply about reaching this year's revenue target. It is also about ensuring that fundraising remains sustainable in the years ahead. And organizations that receive significant support from a smaller group of donors are not necessarily facing a problem. In many cases, they have done an excellent job developing strong donor relationships. But understanding how much of an organization's fundraising revenue comes from these donors can help it recognize potential risks before they become challenges.
Strong fundraising programs are built on more than donor generosity. They are also built on good stewardship practices, clear organizational systems, accessible donor information, and a long-term understanding of how donor relationships support the organization's mission. And, as fundraising environments continue to evolve, organizations that understand their donor base, preserve fundraising knowledge, and manage donor relationships effectively will be better positioned to navigate future opportunities and challenges.
What's Next for Your Fundraising?
If your organization is receiving a larger share of its funding from a smaller number of donors, it may be worth taking a closer look at your donor data, fundraising strategy, and long-term sustainability.
Whether you're evaluating fundraising risks, reviewing donor trends, preparing for a leadership transition, or looking for ways to strengthen your fundraising capacity, we can help you understand your donor relationships today and help support better fundraising decisions in the future.
